‘Sick pay the number one benefit self employed want’

UK micro-business owners and freelancers would be more interested in receiving sick pay than any other statutory benefit, according to new research.

A poll of nearly 900 UK micro-businesses, carried out in collaboration between cloud accounting software firm FreeAgent and The Freelancer & Contractor Services Association (FCSA), found that sick pay provision is the benefit that self-employed workers would most welcome, coming way ahead of other benefits such as maternity pay, job seekers allowance and pension auto-enrolment.

The survey found that 76% of respondents currently do not have any method of providing sick pay, maternity/paternity leave, holiday or redundancy pay in their business. Some 19% had provisions for sick pay, 15% for holiday pay, 5% for redundancy pay and 5% for maternity/paternity/adoption leave and pay.

The survey found sole traders were more likely to value benefits (rating sickness provision 8.7 out of 10) compared to those working through their own limited companies, who gave a score of 6.4 out of 10 for sickness provision.

In addition, the survey revealed that more than a third (35%) of respondents did not currently have any plans in place to fund their retirement. And, when it comes to auto-enrolment, 22% of respondents said they would opt out of auto-enrolment with 28% unsure if they would or not. One third of limited companies (32%) said they would opt out compared to 14% of sole traders. This contributed to auto-enrolment being one of the least favoured benefits with those working through limited companies valuing it at 5.5 out of 10, compared to sole traders who valued it as 7.3 out of 10.

The survey comes ahead of the Taylor review in the Modern Workplace which will examine how employment practices need to change in order to keep pace with modern business models – including the rights of self-employed and gig-economy workers.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “The UK Government seems determined to ‘level the playing field’ between self-employed and employed workers, but this is actually very unfair on people who run very small businesses, as it does not take into account the huge amount of personal risk that is associated with being self-employed.

“Ideally, the UK’s millions of freelancers and micro-business owners should be able to enjoy the same statutory entitlements as their employed counterparts – especially if they will be expected to pay the same level of tax. I therefore hope that the forthcoming Taylor review will be looking closely into this issue, and that the report will make suitable recommendations for how to address the current inequality that exists between employed and self-employed workers.

“The Government needs to acknowledge the tremendous financial risks associated with starting and running your own business and bear this in mind when deciding on its future tax policies.”

Julia Kermode, FCSA’s chief executive, added: “I hope that our evidence helps to inform policy decisions, particularly if the Government intends to increase tax or NICs for self-employed people – as there must be something offered in exchange for increasing the financial burden of the self-employed. Not all self-employed workers want the same things so there is no one-size fits all solution, in particular those working through their own limited companies are more likely to already have provision for welfare benefits. The Government should find a way of offering additional benefits specifically to those people who want and need them.”